November 30, 2011, 4:37 PM

Online tax fight goes before a Congressional committee

Amazon and eBay argue about the merits of a nationwide sales tax law.

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Retailers took their sales tax arguments to Capitol Hill today as lawmakers continued to consider a law that would make it easier for states to collect taxes from e-commerce transactions.

The arguments from such retailers as Amazon.com Inc., No. 1 in the Internet Retailer Top 500 Guide, and eBay Inc. took place at hearing before the U.S. House Judiciary Committee. A bipartisan bill called the Marketplace Fairness Act would let states that have simplified their sales tax collection rules to require online and catalog retailers that take in at least $500,000 in annual sales to collect taxes from customers in those states. The act would enable states to collect taxes even if the retailers don’t have a physical presence in those states, a requirement born of a 1992 U.S. Supreme Court decision.

Amazon supports the bill. “Sellers should compete on a level playing field,” said Paul Misener, vice president, Amazon global public policy, in his prepared remarks today. “Congress should not exempt too many sellers from collection, for these sellers will obtain a lasting unlevel playing field versus Main Street and other retailers. Congress should rectify the current imbalance and avoid a future imbalance.”

EBay, meanwhile, says that even with the exemption, many of the sellers it serves will still have to pay taxes, eating into their profits. “Small business retailers face many competitive disadvantages when compared to smaller larger retailers,” said Tod Cohen, eBay’s vice president and deputy general counsel of government relations, in his testimony. “Do those who want a level playing field demand that all small business retailers get the same tax credits, the same sales tax exclusions and the same shipping rates?”

U.S. Rep. John Conyers, a Democrat from Michigan and ranking member of the committee, said it was unfair that local bricks-and-mortar store operators had to collect sales taxes while larger online retailers do not. “Main street retailers—local mom-and-pop stores in many instances, and even some of the big-box retailers –suffer when they have to collect the sales tax but on-line retailers don't," he said. "Fewer purchases at local retailers means less local jobs."

The National Retail Federation also weighed in. “Sales tax fairness requires all sellers, whether brick and mortar or remote, to collect sales taxes, but only after the states have simplified their collection requirements,” says David French, the trade group’s senior vice president of government relations, in his testimony. “NRF urges the committee to enact sales tax collection reform that will level the playing field between brick and mortar and remote sellers by granting states the authority to collect sales taxes from all sellers regardless of their distribution method.”

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